Page 39 - Risk Management in current scenario

different financial sectors; some of those challenges are discussed below:

X Risk culture is not mature in India to fully implement the ERM; the
behavior towards acceptance of risk has an element of reluctance;
this may be driven by the attitude of not accepting the existence of
risk. Such attitude could further be the output of audit mindset
where audit findings are considered as a gap in the process. More
research is needed in this area to find out the real reasons. The point
to understand is that risk identification is not a gap because
identifying the risks only help in locating the pitfalls that may come
in the way of achievement of the business objective. Risk
management is not a deterrent but an enabler.

X The current business culture in India focuses on rewards based on
year-on-year growth of the business; western markets, on the
contrary, have elements of effectiveness of risk management as well
as the growth factor in the reward structure. Such inclusion of
controls will not only help in boosting the bottom line but also in
creating the right risk culture within the organization.
X Very few business organizations in India are using statistical models
to project future scenarios and apply stress testing to look into the
anticipated future and preempt the risks. Scenario and Stress Testing
(SST) is becoming a very strong tool to assess the resilience of the
business against various economic and demographic variables.
X Currently, in many organizations, strategy and risk management are
not integrated which results in strategy failing. Strategic risk
management helps in keeping the strategy agile based on emerging
market conditions.

X Apart from these technical gaps, there are also shortages of qualified
risk professionals; this is further aggravated by lack of quality risk
management institutions to deliver risk education. Many B-Schools
in India are yet to include risk management courses in their core
curriculum. This however, is prevalent globally.
X Most of the corporate governance guidelines issued in recent years
have strengthened the role of the Board in providing risk

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